The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934

54 Pages Posted: 14 Feb 2022 Last revised: 16 Apr 2023

See all articles by Oliver Binz

Oliver Binz

ESMT European School of Management and Technology

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

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Date Written: February 2022

Abstract

We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed results. We focus on whether the Act increased earnings informativeness, improving upon prior designs by focusing on short earnings announcement windows and employing a difference-in-differences design to control for potential contemporaneous structural changes. We document an increase in earnings informativeness following the Act, which is larger for treatment firms (which withheld disclosure before the Act) than for control firms. The increase in informativeness is more pronounced for firms that are subject to stronger enforcement.

Suggested Citation

Binz, Oliver and Graham, John Robert, The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934 (February 2022). NBER Working Paper No. w29747, Available at SSRN: https://ssrn.com/abstract=4034197

Oliver Binz (Contact Author)

ESMT European School of Management and Technology ( email )

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John Robert Graham

Duke University ( email )

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National Bureau of Economic Research (NBER)

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